Netflix has officially agreed to pay all cash for the Warner Bros. Discovery studio and HBO Max business. The move is aimed at thwarting Paramount Skydance’s rival takeover campaign.
Netflix and WBD announced on Tuesday that they have amended their definitive agreement regarding Netflix’s proposed acquisition of Warner Bros. assets to an all-cash transaction of $27.75 per share. The transaction has a continuing enterprise value of $82.7 billion. The companies said the revised agreement “simplifies the transaction structure, increases value certainty for WBD shareholders, and accelerates the path to a WBD shareholder vote.”
The original deal between Netflix and WBD, announced on December 5th, was approximately 84% cash, but Paramount Skydance has been offering 100% cash. One relative weakness of the Netflix arrangement as originally constructed is that it would result in lower dividends to WBD shareholders if Netflix’s stock price fell below a certain threshold.
Netflix and WBD said the all-cash transaction “increases certainty of the value that WBD shareholders will receive upon completion of the transaction and eliminates market-based volatility.” Additionally, the revised transaction terms will facilitate a “faster path” to a WBD shareholder vote on the deal with Netflix. Shareholders will be able to vote on the proposed transaction by April 2026. On Tuesday, WBD filed a preliminary proxy statement with the SEC “in support of this accelerated schedule.”
Another change: Netflix agreed to reduce the designated amount of net debt incurred by Discovery Global, the cable TV network entity being spun off prior to Netflix’s acquisition of WB Studios and HBO Max, by $260 million. According to Warner Bros. Discovery’s proxy statement, this is “based on Discovery Global’s stronger 2025 cash flow performance than previously expected.”
Netflix and WBD said the deal is expected to close within 12 to 18 months after the original deal was signed on December 4, 2025.
Netflix’s initial bid included $59 billion in debt financing from three banks: Wells Fargo, BNP and HSBC. The modified all-cash transaction was unanimously approved by the Netflix and WBD boards of directors. The M&A transaction will still require regulatory approval in the US and Europe, as well as approval from WBD shareholders.
The Netflix deal revisions come as David Ellison’s Paramount Skydance continues to make the case to shareholders why an all-cash hostile takeover bid of $30 per share is better than the Netflix deal, despite the WBD board rejecting eight different offers from Paramount. Paramount’s camp also claims that the WBD deal would face less regulatory pushback than the Netflix-WB merger.
Paramount filed a lawsuit earlier this month demanding that WBD disclose financial details of its deal with Netflix, including how WBD valued the proposed Discovery Global. Paramount has also formally announced the start of a proxy fight and plans to elect its own WBD director nominees to support Paramount’s bid at Warner Bros. Discovery’s annual shareholder meeting.
WBD said in its Jan. 20 proxy filing that its board’s analysis of “selected public companies” on a sum-of-parts basis provided an approximate implied stock value reference range for Discovery Global.
$2.41 to $3.77 per share. Additionally, the company said its analysis of Discovery Global, including potential future acquisitions (based on some transaction analysis), indicated that Discovery Global was valued at between $4.63 and $6.86 per share.
Paramount argued that its $30 per share offer was higher than the Netflix deal, and that its analysis showed Discovery Global’s stock would be worth zero (though it acknowledged that Discovery Global’s theoretical M&A value was $0.50 per share).
In Tuesday’s announcement, Netflix and WBD said they have filed Hart-Scott-Rodino filings with the FTC and the Justice Department’s antitrust division, respectively, and are “working with competition authorities, including the U.S. Department of Justice and the European Commission.” As previously disclosed, the transaction is expected to close in 12 to 18 months from December 5, when Netflix and WBD first entered into the merger agreement.
“Today’s revised merger agreement moves us closer to combining two of the world’s best storytelling companies, so the most people can enjoy the entertainment they most want to see,” said David Zaslav, President and CEO of Warner Bros. Discovery.
“The revised all-cash agreement accelerates the timeline for the shareholder vote and provides $27.75 per share in cash, plus a larger financial boost in value from the planned separation of Discovery Global,” Netflix co-CEO Ted Sarandos said in a statement. “Together, Netflix and Warner Bros. will offer greater choice and greater value to audiences around the world, enhancing access to world-class television and movies both in the home and in theaters. This acquisition also significantly expands U.S. production capabilities and investment.” Drive job creation and long-term industry growth with original programs. ”
Greg Peters, Netflix’s other co-chief executive officer, said: “Over the past decade, when much of the entertainment industry has shrunk, Netflix has made significant investments and growth in its film and television businesses in the U.S. and abroad. This transaction supports that growth and investment. By amending our agreement today, we are emphasizing what we have always believed: Not only does our deal deliver superior shareholder value, but it is fundamentally pro-consumer, pro-innovation, pro-creator and pro-growth.”
Under the Netflix and WBD deal, the streaming giant will acquire Warner Bros.’ film and television studios, HBO and HBO Max, and its gaming division. This comes after WBD separates Warner Bros. and Discovery Global into two separate publicly traded companies, which is expected to be completed within six to nine months.
Since the Warner Bros. deal was announced on Dec. 5, Netflix stock has fallen below the $97.91 per share “collar” of the original WBD deal. In that case, WBD shareholders would receive 0.0460 Netflix shares for each WBD share, rather than Netflix shares worth $4.50 per WBD share. Now I no longer have to worry about that.
Paramount Skydance is proposing to acquire the entire Warner Bros. Discovery company, including television networks such as CNN, TNT, TBS, HGTV, and the Food Network. Paramount’s bid is backed by billionaire Larry Ellison, David Ellison’s father and co-founder of Oracle, as well as partners including Redbird Capital Partners and sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi.
Netflix and WBD said the financing structure of Netflix’s all-cash deal is not subject to review by the Committee on Foreign Investment in the United States (CFIUS), the U.S. government agency that oversees foreign investments in U.S. companies. Paramount argued that its proposal did not require CFIUS review because the Arab Asset Fund “has agreed to relinquish any governance rights,” including board representation.
The dissolution fee in Netflix and WBD’s contract remains unchanged. If WBD withdraws from the deal, it will have to pay Netflix a $2.8 billion termination fee. If the deal is blocked by regulators, Netflix stands to pay $5.8 billion to WBD.
